Benefit Plan Audit Opportunities
Sheldon M. Geller
2006 - There are significant opportunities for middle-market
CPA firms to build employee benefit plan audit practices.
National firms have been preoccupied with engagements related
to compliance with the Sarbanes-Oxley Act (SOX), while larger
firms have been avoiding lower-margin pension plan audit
engagements or, by quoting these engagements at considerable
fees, driving the business to middle-market firms.
U.S. Department of Labor (DOL) requires all employers with
more than 100 eligible employee-benefit-plan participants,
as well as certain smaller employers, to conduct employee
benefit plan audits. More than 75,000 employee benefit plan
audits are conducted each plan year, with the number continuing
to grow. A well-developed pension plan audit practice may
convert a traditionally ancillary service into a significant
practice area. Furthermore, CPAs may build relationships
with plan sponsors and their boards of directors and trustees.
firms may distinguish themselves by emphasizing pension
auditing and having certain partners, managers, and staff
concentrate on auditing employee benefit plans. These audits
are specialized engagements requiring particular knowledge
of the Employee Retirement Income Security Act (ERISA) and
the development of specific audit manuals.
SOX requires plan sponsors to choose an auditor other than
their corporate auditor to audit their employee benefit
plan. Thus, CPA firms may audit an employee benefit plan
even if they do not audit the plan sponsor’s financial
statements. Employee benefit plans for large and small public
and private companies and not-for-profit entities include
defined benefit plans, defined contribution plans, 401(k)
plans, employee stock ownership plans, and health and welfare
regulations permit a plan sponsor to be fined if it retains
a CPA firm without sufficient knowledge to properly perform
the plan audit. The DOL can also report CPA firms to the
relevant state board of accountancy and the AICPA’s
Professional Ethics Division. An ethics investigation can
result in disciplinary actions against the responsible parties,
including sanctions and the loss of professional licensure.
AICPA Employee Benefit Plan Audit Quality Center offers
resources to enhance a firm’s audit performance. The
center offers employee benefit plan best practices and advises
on recent employee benefit plan audit developments. This
practice area represents a niche for firms that can retain
employee benefit professionals, providing a firm with engagements
outside of the tax season.
M. Geller, Esq., is managing director of the Geller
Group LLC, a member of Focus Financial Partners.